Latest news with #GDPNow
Forbes
5 days ago
- Business
- Forbes
What Dividend Investors Are Forgetting About The Powell Drama
Here's something most dividend investors forget about interest rates: The Fed does not call all the shots here. This means that, in the coming months, we may see a setup where the Fed's rate—the 'overnight' rate at which financial institutions lend to each other—and the 10-year Treasury rate (pacesetter for business and consumer loans) part company. Today we're going to dig into a 'stealth' 5.7%-paying stock that's a perfect contrarian play on this situation. This one pays us every month, too. Fed Cuts … and Rates Soar!? I say that this 'rate split' is possible because, well, it's already happened in the last few months. Let's rewind to last September, when the Fed brought in its first rate cut since 2020, after hiking rates during the 2022 inflation spike and holding them steady since. The bond market, however, was having none of it. Even as the Fed cut, 10-year Treasury rates soared, sending Powell a clear message: Slow your roll. When the Fed cut rates last September, it ironically sparked a serious rally in long yields. The 10-year rate soared from 3.6% to 4.8%. That's a 33% move! Once Powell backed off, leaving the Fed's rate where it is now, the 10-year yield leveled off, as you can also see at the right side of the above chart. We could very well be in for a repeat of last September, and here's why: The Atlanta Fed's GDPNow model has the economy clipping along at a 2.9% rate as I write this. That's solid growth. Plus we're heading into (ugh) another election cycle, which means more stimulus is likely. Meantime, option traders have the Fed cutting rates by at least 50 basis points by the end of the year. Remember, too (and how could we forget?) that Powell's term ends in May, and he's likely to be replaced by someone who will work with the administration to lower rates. Our 'Stealth' Monthly Dividend Play on a Potential 'Rate Split' Put it all together and we could easily have a setup where the Fed cuts and reignites a rally in 10-year Treasury yields, a la 2024. One stock poised to profit is a business development company (BDC) called Main Street Capital (MAIN). Now first let me say that we'd normally be cautious around BDCs in such a rate environment. That's because they lend money to small- and mid-sized businesses (think regional manufacturers, healthcare providers and the like), with MAIN going after firms with $25 million to $500 million in revenue. Moreover, a large slice of their loans tend to be floating-rate, and as such tend to move with the Fed funds rate (which, as we've been discussing, looks set to decline from here). But even if a rapid fall in the Fed rate were to play out (and it isn't likely to be abrupt, as it's not just the Fed Chair, but the entire Open Market Committee, that has a say on rate moves), it'll likely be accompanied by still-strong economic growth. And that means more chances for BDCs to spur new loans—with MAIN, as one of the leaders in the BDC market, likely to grab a healthy share. Moreover, while MAIN doesn't get specific, it did note in its latest investor presentation that its floating-rate loans 'generally' include minimum 'floor' rates. The firm also says that 77% of its outstanding debt obligations are fixed rate, while on the lending side, 68% of its debt investments (i.e., loans outstanding) are floating-rate. That gives the company some built-in insulation on both sides of the balance sheet. About That 5.7% 'Stealth' Yield Then there's the company's dividend yield, which, if you look it up on a free stock screener, will show up at around 4.7%. But that's the forward yield, annualized based on the latest monthly payout. And it's likely an understatement. A better measure for stocks like MAIN, which issue regular special—or as the company calls them, 'supplemental'—dividends, is the trailing-12-month yield. In the last 12 months, MAIN has issued three supplementals, making its trailing yield a much higher 5.7%. Moreover, over its 18-year history, this ironclad lender has never cut or suspended its payout, even during the pandemic or financial crisis. Check out this happy payout chart: (And to be clear, those dips in the chart above aren't reductions—they're those 'supplemental' payouts I just mentioned, as are the spikes.) The BDC's payout gets an assist from the fact that, like real estate investment trusts (REITs), BDCs must pay 90% of their income in order to be exempted from corporate taxes by the federal government. And its portfolio is impressively diverse. Right now, MAIN holds investments across 189 companies. And its largest holding makes up just 3.2% of investment income. In fact, most investments represent less than 1%, spreading the risk nicely. Even better, these holdings span dozens of industries, and MAIN doesn't let any one industry dominate (none currently tops 10% of its investments). It's exactly the kind of broad diversification that helps manage potential portfolio heartburn. No wonder MAIN has trounced the BDC index fund since that fund's launch in 2013: We're up 22% on MAIN since our buy in May 2025—less than three months ago! That's good for 91% on an annualized basis. The stock is now above the buy-up-to-price I recommend in my Contrarian Income Report service. So we're not buying more now, but we are more than happy to keep holding and collecting MAIN's healthy payout. If you missed our May call, you do not want to miss our next buy window. I expect that one to open when the Fed restarts rate cuts—and that could come as soon as September. When the next opportunity shows up, I'll let Contrarian Income Report members know. Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever. Disclosure: none
Yahoo
27-06-2025
- Business
- Yahoo
S&P 500 hits all-time high - Now what?
S&P 500 hits all-time high - Now what? originally appeared on TheStreet. The naysayers were once again proven wrong. Despite an economy in turmoil, an uncertain Federal Reserve, and geopolitical unease, the S&P 500 has climbed the proverbial wall of worry and notched a new all-time high, surpassing levels last seen in February before President Trump's tariff announcements sent stocks reeling. The S&P 500's returns have been impressive, gaining more than 23% since Trump on April 9 switched gears and paused reciprocal tariffs for 90 days to hammer out trade deals. 💸. 📈 It's been an even more dramatic run for the technology-heavy Nasdaq Composite. Since its early April low, that index has shot up more than 32%, largely on the back of AI powerhouses like Nvidia and Palantir, which have gained 64% and 95% over the period. The moves will likely have many scratching their heads, wondering what could happen next to the benchmark index. Fortunately, longtime analyst Ryan Detrick, chief strategist of Carson Group, has crunched the numbers to see what the S&P 500 historically has done in the wake of similar record-setting highs. The lifeblood of stock market returns is revenue and profit growth. The more sales and earnings, the more willing investors are to pay up for shares. Because of this, economic health is key to the S&P 500's performance. If households and businesses are expected to open their wallets more in the future, it's good for business, and that's good for stock market this year, worries that tariffs would spike inflation, crimping spending, led many to believe we were on the cusp of stagflation (inflation without GDP growth) or an outright recession. Those worries were compounded by the fact that the Fed hit the brakes on interest-rate cuts this year due to concerns that lower rates alongside tariffs would cause inflation to skyrocket. The concerns haven't fully disappeared, but they've retreated. While US GDP growth in the first quarter was slightly negative, most expect GDP to recover in the second quarter and for full-year GDP to be positive. The Federal Reserve pegs GDP growth at 1.4% this year, and the Atlanta Fed's GDPNow tracking tool suggests second-quarter GDP increased by 3.4%. Of course, the GDPNow measure will change as more data arrive, but the Q2 numbers are likely to be solid. More Experts Analyst makes bold call on stocks, bonds, and gold TheStreet Stocks & Markets Podcast #8: Common Sense Investing With David Miller Veteran fund manager sends dire message on stocks If so, the US might sidestep a profit-busting economic reckoning, allowing investors to ratchet higher their models for corporate profit. Additionally, the stock market has become more optimistic about the likelihood of Fed rate cuts later this year. Fed Chairman Jerome Powell is under intense pressure from Trump to cut rates, and a wobbly jobs market could mean the Fed won't stay sidelined much longer as long as inflation remains in check. In April, core Personal Consumption Expenditures inflation, the gauge favored by the Fed, showed prices rose 2.5% from one year ago. That's above the Fed's 2% target but arguably not overly concerning, given that the Fed cut rates by 1 percentage point last year when inflation was higher. The S&P 500 may have priced in a lot of the potential upside associated with a healthier-than-expected economy. The S&P 500's price-to-earnings multiple, a key valuation measure investors use, peaked at more than 22 in February 2025 when the S&P 500 last made a new high. After retreating to 19 in April, the runup in stock prices has outpaced upward earnings revisions, causing the S&P 500's p/e multiple to swell again. According to FactSet, the benchmark index trades with a forward one-year p/e multiple of nearly 22. Historically, when the S&P 500's p/e multiple has been this high, gains in the following year have been harder to come by, with a negative average return from 1971 through 2020. History certainly isn't a guarantee, but Ryan Detrick considered what'd happened in the past when stocks behaved similarly, and his study also suggests lackluster returns are possible from here. "The S&P 500 hasn't hit a new high in more than four months, but that could end any day now," wrote Detrick on X. "Turns out, when it goes between 4-12 months without a new [all-time high] and then hits one, the forward returns are quite muted. Not once up double digits a year later. Hmm." Detrick spotted four prior instances that met his criteria for similarity. The average return one year after notching the new high after not having a new high for between four and 12 months is just 4.4%, significantly below the stock market's average 11%-plus annual return over the past 50 years. The shorter-term returns are potentially more concerning, though. In his study the average 3-month and 6-month returns for the S&P 500 were negative 5% and negative 1.3%, respectively. Of course, anything can happen. Much will depend on what actually happens with inflation, jobs, the Fed, and trade deals. Still, the data may suggest that investors should temper their outlook, at least for now. It's not all bad news for most investors, though. Remember, stock market weakness can provide a great opportunity to buy the dip on the market or individual stocks. Just ask anyone who bought stocks in April.S&P 500 hits all-time high - Now what? first appeared on TheStreet on Jun 27, 2025 This story was originally reported by TheStreet on Jun 27, 2025, where it first appeared. Connectez-vous pour accéder à votre portefeuille
Axios
27-06-2025
- Business
- Axios
Americans spent and earned less in May as trade war bites
Amid Stagflation Watch 2025, the latest data dump shows a little more stag-, but no real sign of -flation. Why it matters: Mainstream economic forecasts see the trade war leading to both higher prices and more sluggish growth. In May spending and income data out Friday morning, there is more reason to worry about the latter than the former. By the numbers: The Personal Consumption Expenditures price index targeted by the Fed rose a mere 0.1% in May, with the core gauge — excluding food and energy prices — up 0.2 %. While core inflation ticked up to 2.7% year-over-year in May, it has risen at only a 1.7% annualized pace over the last three months. That's the lowest since December 2023, and fully consistent with the Fed's 2% inflation target. Tariff-driven inflation remains the dog that won't bite. State of play: The worrying aspects of the report weren't on the inflation side of the ledger, but in what Americans are earning and spending. Adjusted for inflation, consumer spending fell 0.3% after rising by 0.1% in April. Real disposable income declined by 0.7% last month, the first time since last August that inflation outstripped pay growth. The new numbers brought Atlanta Fed's GDPNow tracker down to an estimate of 2.9% GDP growth rate in Q2, from 3.4%. What they're saying: "Consumers cut back on outlays last month, making fewer discretionary purchases as they grapple with softer labor market conditions, increased financial uncertainty and the onset of tariff-induced price increases," wrote EY-Parthenon senior economist Lydia Boussour in a note. Reality check: The drops in consumption spending and incomes can be at least partly chalked up to one-off events, instead of outright evidence of an economic slowdown. Consumers are easing spending after a springtime splurge on all sorts of goods, aimed at getting ahead of tariff-related price increases. For instance, the biggest drag on spending was goods, autos in particular — a category that was a key beneficiary of spending earlier in the year. The drop in personal income came after a spike in recent months, including a 0.7% jump in April alone from a payout of social benefits for teachers, firefighters and police officers, related to recent legislation. Now it is wearing off. Yes, but: It's clear that the economy had less momentum coming into the second quarter than initially believed. Revisions out Thursday showed the economy weakened at a faster pace in the first quarter, in part due to a slower rate of consumer spending. Economic policymakers were reassured that underlying measures of growth held up as tariff front-loading weighed on the headline figure. But those measures were also revised lower: Real final sales to private domestic purchasers, the sum of consumer spending and investment, rose 1.9% in the first quarter — down 0.6 percentage point from the previous estimate and well below the 3% figure first reported. Minneapolis Fed president Neel Kashkari pondered Friday how tariffs are likely to impact consumer prices — and why there's so little sign of it in the data so far.
Miami Herald
27-06-2025
- Business
- Miami Herald
S&P 500 hits all-time high - Now what?
The naysayers were once again proven wrong. Despite an economy in turmoil, an uncertain Fed, and geopolitical unease, the S&P 500 has climbed the proverbial wall of worry and notched a new all-time high, surpassing levels last seen in February before President Trump's tariff announcements sent stocks reeling. The S&P 500's returns have been impressive, gaining over 23% since President Trump switched gears and paused reciprocal tariffs for 90 days on April 9 to hammer out trade deals. Related: Jim Cramer sends strong message on Nvidia stock at all-time highs It's been an even more dramatic run for the technology-heavy Nasdaq Composite. Since its early April low, that index has shot up over 32%, largely on the back of AI powerhouses like Nvidia and Palantir, which have gained 64% and 95% over the same period. The moves will likely have many scratching their heads, wondering what could happen next to the benchmark index. Fortunately, long-time analyst Ryan Detrick, chief strategist of Carson Group, has crunched the numbers to see what the S&P 500 historically has done in the wake of similar record-setting highs. Weiss/Getty Images The lifeblood of stock market returns is revenue and profit growth. The more sales and earnings, the more willing investors are to pay up for shares. Because of this, economic health is key to the S&P 500's performance. If households and businesses are expected to open their wallets more in the future, it's good for business, and that's good for stock market returns. Related: Veteran Tesla bull drops surprising 3-word verdict on robotaxi ride Earlier this year, worries that tariffs would spike inflation, crimping spending, led many to believe we're on the cusp of stagflation (inflation without GDP growth) or an outright recession. Those worries were compounded by the fact that the Federal Reserve hit the brakes on rate cuts this year due to concerns that lower rates alongside tariffs would cause inflation to skyrocket. The concerns haven't fully disappeared, but they've retreated. While US GDP growth in the first quarter was slightly negative, most expect GDP to recover in the second quarter and for full-year GDP to be positive. The Federal Reserve pegs GDP growth at 1.4% this year, and the Atlanta Fed's GDPNow tracking tool suggests second-quarter GDP increased by 3.4%. Of course, the GDPNow measure will change as more data arrives, but it's likely the second quarter numbers will be solid. More Experts Analyst makes bold call on stocks, bonds, and goldTheStreet Stocks & Markets Podcast #8: Common Sense Investing With David MillerVeteran fund manager sends dire message on stocks If so, the US may sidestep a profit-busting economic reckoning, allowing investors to ratchet higher their models for corporate profit. Additionally, the stock market has become more optimistic about the likelihood of Fed rate cuts later this year. Fed Chair Jerome Powell is under intense pressure from President Trump for rate cuts, and a wobbly jobs market could mean that the Fed won't stay sidelined much longer as long as inflation remains in check. In April, core Personal Consumption Expenditures (PCE) inflation, the gauge favored by the Fed, showed prices rose 2.5% from one year ago. That's above the Fed's 2% target but arguably not overly concerning, given that the Fed cut rates by 1% last year when inflation was higher. The S&P 500 may have priced in a lot of the potential upside associated with a healthier-than-expected economy. The S&P 500's price-to-earnings ratio, a key valuation measure used by investors, peaked over 22 in February 2025 when the S&P 500 last made a new high. After retreating to 19 in April, the runup in stock prices has outpaced upward earnings revisions, causing the S&P 500's P/E ratio to swell again. According to FactSet, the benchmark index trades with a forward one-year P/E ratio of nearly 22. Historically, gains in the following year when the S&P 500's P/E ratio has been this high have been harder to come by, with a negative average return from 1971 through 2020. History certainly isn't a guarantee, but Ryan Detrick considered what's happened in the past when stocks have behaved similarly, and his study also suggests lackluster returns are possible from here. "The S&P 500 hasn't hit a new high in more than four months, but that could end any day now," wrote Detrick on X. "Turns out, when it goes between 4-12 months without a new ATH [all-time high] and then hits one, the forward returns are quite muted. Not once up double digits a year later. Hmm." Detrick spotted four prior instances that met his criteria for similarity. The average return one year after notching the new high after not having a new high for between four and twelve months is just 4.4%, significantly below the stock market's average 11%-plus annual return over the past 50 years. The shorter-term returns are potentially more concerning, though. In his study, the average 3-month and 6-month returns for the S&P 500 were negative 5% and negative 1.3%, respectively. Of course, anything can happen. Much will depend on what actually happens with inflation, jobs, the Fed, and trade deals. Still, the data may suggest that investors should temper their outlook, at least for now. It's not all bad news for most investors, though. Remember, stock market weakness can provide a great opportunity to buy the dip on the market or individual stocks. Just ask anyone who bought stocks in April. Related: Legendary fund manager issues stock market prediction as S&P 500 tests all-time highs The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
12-06-2025
- Business
- Yahoo
Bitcoin Will Rally as U.S. Growth Improves, Crypto Bills Progress: Coinbase Research
A more upbeat macroeconomic backdrop, growing corporate appetite for digital assets, and increased regulatory clarity will fuel a constructive outlook for crypto markets in the second half of 2025, according to a report by Coinbase Research. After a bumpy first quarter marked by a brief contraction in U.S. GDP and trade disruptions, data now point to stronger growth. The Atlanta Fed's GDPNow tracker has jumped to 3.8% QoQ as of early June, a sharp upgrade from earlier in the year. This shift, alongside expectations of Federal Reserve rate cuts and a less aggressive trade policy, has eased recession fears and strengthened investor sentiment. Declining dollar dominance and inflation protection use-cases may also boost bitcoin's BTC appeal, even if long-dated U.S. Treasury yields remain elevated, the report said. Altcoins may lag unless they benefit from specific catalysts, such as ETF approvals or protocol developments. Meanwhile, public companies are increasingly adding crypto to their balance sheets, aided by a 2024 rule change allowing "mark-to-market" accounting for digital assets. While this trend is expanding demand, it's also introducing new systemic risks. Firms that fund crypto buys with convertible debt may be forced to sell if refinancing options dry up or prices fall sharply. Regulatory developments are also expected to reshape the market, the report said. The Senate recently passed the GENIUS Act, a bipartisan stablecoin bill now heading to the House. A broader market structure bill, the CLARITY Act, aims to define the roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in overseeing digital assets. If passed, it could clarify rules for both issuers and investors. Separately, the SEC is considering more than 80 crypto ETF applications, including multi-asset funds and proposals involving staking and altcoins. Some rulings could be made as early as July, and the rest are likely to be finalized by October. Overall, bitcoin appears poised to benefit from both macro and structural tailwinds in the second half of the year, while the outlook for altcoins will depend on navigating a more complex and still-evolving regulatory and liquidity environment, according to the report. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
